Dems demand tougher standards for companies running Medicaid systems

A group of Democratic senators is demanding that the federal agency overseeing Medicaid — the health coverage program for people with low incomes or disabilities — institute tougher standards for government contractors running complex computer systems that millions of people rely on to get benefits.

Three Democratic senators issued recommendations a year after launching an inquiry into companies — Deloitte, General Dynamics Information Technology, Gainwell Technologies, and Conduent — that are paid billions in taxpayer dollars to build or run eligibility systems for safety net health coverage. Those benefits, provided to the poorest Americans, can mean the difference between having medical care or going without.

A handful of states directly operate their Medicaid eligibility systems, but most rely on contractors to build and run them. KFF Health News found that Deloitte dominates this slice of government business. Deloitte-run systems have been plagued by errors that can result in eligible people losing their health coverage, previous KFF Health News investigations have shown. Malfunctions can cost millions of taxpayer dollars and take years to fix.

"Administrative errors in this line of work are not like errors in other fields," the senators wrote in a new report. "There are life-and-death consequences for sick Americans who seek care only to find that their Medicaid coverage has been terminated."

President Donald Trump's signature tax and domestic policy law has mandated Medicaid changes that are forcing states to adapt their computer systems on a compressed timeline. Medicaid policies under the One Big Beautiful Bill Act add red tape and restrictions that make it harder for people to stay enrolled.

Those include the first federally mandated work requirements in Medicaid's history. Next year, to keep benefits, millions of adult Medicaid enrollees in more than 40 states must prove they're working or doing a similar activity for at least 80 hours a month, unless they qualify for an exemption.

Democratic senators Ron Wyden of Oregon, Elizabeth Warren of Massachusetts, and Raphael Warnock of Georgia say the new restrictions — layered atop computer systems with histories of problems — will result in large numbers of people improperly losing health coverage.

State eligibility systems "have been built up, patched, and frankensteined for decades," the senators said.

The senators sit on the powerful Senate Finance Committee, which oversees government health programs such as Medicare and Medicaid. Many of their recommendations target the Centers for Medicare & Medicaid Services. Their ideas face long odds at the moment. Republicans control executive branch agencies, and any potential legislation would need to advance in a Republican-controlled Congress.

That balance of power could shift if Democrats win a majority of Senate seats in November's midterm elections. The three lawmakers called on CMS to establish mandatory standards in state contracts with companies so states can receive federal funds.

These companies sign contracts with state governments, but the federal government approves them and pays the bulk of the cost. The federal government covers 90% of state costs to develop and implement state Medicaid eligibility systems and 75% of ongoing maintenance and operations expenses, according to federal regulations.

The lawmakers also said CMS should publicize the contracts and contract amendments. Currently, those documents can be obtained from state governments, but accessibility varies significantly.

The senators also said CMS should publicly disclose companies' performance data and change orders. Change orders are used to adjust computer systems, and states set aside millions of dollars for them. But systems may require fixes beyond the agreed-upon work.

"The millions of Medicaid enrollees who will be required to prove their eligibility every six months, to document every hour of work on a glitchy portal, to find a doctor willing to certify that their cancer or their chronic condition is bad enough to qualify for an exemption — deserve contractors who are accountable for what happens when the system fails them," they wrote.

In October 2025, the three Democratic senators, as well as Sen. Bernie Sanders (I-Vt.), sent letters to several companies that CMS identified as eligibility system contractors. At the time, they wrote that it is each company's responsibility to build functioning eligibility systems, "rather than to prioritize their bottom line."

As of June, 66 million people were enrolled in Medicaid, according to CMS.

The lawmakers had asked the companies about their contracts, lobbying expenditures, and protocols for making changes in light of system errors, among other issues. The companies provided the lawmakers with some details but often did not answer their questions.

The companies said states are responsible for making the final call on whether a person receives benefits. State workers approve or deny eligibility, Deloitte said in its response letter, "not a private contractor or an automated system acting alone."

The companies did not provide the senators with specific details about documents or processes they use to help states make eligibility determinations.

The companies also denied they have any financial incentives to remove people from Medicaid. Conduent said it gets paid less if enrollment drops.

The companies did not say whether states are on the hook for paying to fix the companies' errors.

Deloitte, Gainwell, GDIT, and Conduent said it's common for states to require that they meet certain performance metrics.

Gainwell told lawmakers, "We take seriously the issues raised." GDIT said it would answer additional questions from lawmakers.

Deloitte said in its response to the lawmakers: "We are proud of our work serving individuals and families across the U.S."

CMS did not respond to a request for comment.

CMS takes steps to check whether Medicaid eligibility systems are working properly. As part of the process for certifying states' systems, federal officials check certain metrics. They include whether states are correctly calculating people's incomes, whether individuals are given timely eligibility decisions, and whether eligibility categories are accurate. However, it is rare for the federal government to withdraw federal money from states for falling short.

In August, CMS announced it intends to develop standards for Medicaid systems. The ultimate goal is to improve enrollees' access to care and their experiences with these systems, CMS said. The agency also has said the standards will hold companies accountable to deliver systems that are "continuously improving" and have a "stronger capacity to implement critical policy changes."

KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF — the independent source for health policy research, polling, and journalism.